World of Avatar cuts funding to amid Mxit layoffs [Update]

Online social music startup is set to close down after its funding was withdrawn by investment incubator hybrid World of Avatar.

In an email, which was also posted on the service’s site, the company said it couldn’t cover its operating costs with its current revenue streams.

In the mail, the company says it remains dedicated to the South African music industry:

The team is incredibly proud of what we have achieved in the past year. We have been true to our intention of growing and supporting the success of the local music industry. The caliber of people we have in our community is really special. You are some of the most influential and forward thinking individuals in local music scene and it’s been a crazy, wonderful ride working with you all.

We want to take this opportunity to thank all the bands that signed up with We love this industry and are passionate about what we do and we hope to find an alternative solution, because we believe in your success. says that it will resume operations once it finds a suitable funding partner and that it will continue to exist in social media form.

The company was launched in late 2011, and World of Avatar co-founder Peter Matthei among its fiercest proponents. The vision for World of Avatar may well have changed however since his fellow co-founder Alan Knott Craig Junior stepped down as CEO of both it and Mxit following disagreements with investors. The fact that the company wasn’t making enough on its own to even cover costs after being in existence for about a year and a half indicates that may well have ceased to be an attractive investment option.

The social network itself is rumored to be cutting back on staff. One tweeter said that around 14 developers were likely to be laid off.

A source close to Memeburn says that number may well be closer to 42.

Mxit has confirmed only that it is “in conversation with its staff” and told us that it would reveal the nature of those conversations on Monday.

Update: Another Mxit staffer has tweeted that he was one of 40 staff who received retrenchment notices from the social network today:

In effect this means that Mxit is laying off nearly 27% of its workforce.

One might make a case that this was the course of action Knott-Craig wasn’t willing to take in order to secure Mxit’s future and which saw him step down. It’s worth bearing in mind however, that shortly after taking over at the company, the young multi-millionaire laid off some staff, although a few were offered places in World of Avatar companies.



Sign up to our newsletter to get the latest in digital insights. sign up

Welcome to Ventureburn

Sign up to our newsletter to get the latest in digital insights.